1. (a)

   1. (1)

      1. (A) Units qualifying for tax credits are subject to a rent restriction formula that sets the maximum gross rent that may be charged.
      2. (B) The maximum gross rent (including utilities) may not exceed thirty percent (30%) of the imputed income limitation.

   2. (2) If low-income tenants are charged more than the allowable rent:

      1. (A) The unit is in noncompliance; and
      2. (B) Recapture of credits may result.

   3. (3)

      1. (A) Whenever utility costs are paid directly by the tenant, gross rent must include an allowance for utilities.
      2. (B)

2. (i) Telephone and cable are not considered to be essential utilities and are not included in the allowance for utilities.

   1. (ii) See 15 CAR § 86-308 for a discussion of telephones.

3. (b)

   1. (1) Maximum gross rent = (applicable income limit x 30%) divided by twelve (12).

   2. (2) Remember that the tenant's rent plus the utility allowance cannot exceed the maximum gross rent.

      1. (c)
   3. (1) If the rent calculation ends with an amount beyond the decimal point, you must not round the amount up.

   4. (2) Rounding up would charge more than the maximum allowable rent, thus resulting in noncompliance. Example: If the applicable income limit is twenty-one thousand seven hundred fifty dollars ($21,750), multiply by three-tenths (.30) to get six thousand five hundred twenty-five dollars ($6,525), and then divide by twelve (12) to get five hundred forty-three dollars and seventy-five cents ($543.75). You may round this amount down to five hundred forty-three dollars ($543) but you cannot round up to five hundred forty-four dollars ($544). The maximum gross rent including the utility allowance cannot exceed five hundred forty-three dollars and seventy-five cents ($543.75).

      1. (d) 1987–1989 developments.
   5. (1) For developments with 1987, 1988, or 1989 tax credit allocations, the unit rent is calculated using the income limit for the actual number of people in the household.
   6. (2) Thus, the maximum rent can increase or decrease based on respective changes in the household composition.

      # Persons		1	2	3	4	5	6
      IncomeLimits	50%	12,150	13,900	15,600	17,350	18,750	20,150
      60%	14,580	16,680	18,720	20,820	22,500	24,180

   7. (3) The resulting maximum allowable rents (including utility allowance) based on household size equals (limit x 30%) ÷ 12:

      # Persons		1	2	3	4	5	6
      Rents	50%	303	347	390	433	468	503
      60%	364	417	468	520	562	604

   8. (4) The rent decreases based on a reduction in household composition or a decrease in the income limits.

4. (e) 1990+ developments.

   1. (1)

      1. (A) For developments with 1990 and subsequent allocations, the rent formula uses an imputed family size of one and one-half (1.5) persons per bedroom to determine the applicable income limit to be used for rent calculations.
      2. (B) For efficiency or studio units, the one-person income limit is used.

   2. (2)

      1. (A) To determine which income limit is used for the bedroom size rent formula, use the imputed household size of one and one-half (1.5) persons times actual number of bedrooms.
      2. (B) Studio, one (1) person.
      3. (C) One (1) bedroom, one and one-half (1.5) persons.
      4. (D) Two (2) bedrooms, three (3) persons.
      5. (E) Three (3) bedrooms, four and one-half (4.5) persons.
      6. (F) Four (4) bedrooms, six (6) persons.

   3. (3)

      1. (A)

         1. (i) For the one and one-half-person income limit, take the one-person limit, add to the two-person limit, and divide by two (2).
         2. (ii) Multiply your answer by thirty percent (30%) and divide by twelve (12) to arrive at maximum rent.

      2. (B)

         1. (i) Two (2) bedrooms: 1.5 x 2 = 3.
         2. (ii) Use the income for three (3) persons x thirty percent (30%) divided by twelve (12) = maximum rent.

      3. (C)

         1. (i) Three (3) bedrooms: 1.5 x 3 = 4.50, which means that you take the income limit for four (4) persons and add to the income limit for five (5) persons, divide by two (2).
         2. (ii) Multiply by thirty percent (30%) and divide by twelve (12) = maximum rent.

      4. (D)

         1. (i) Four (4) bedrooms: 1.5 x 4 = 6.
         2. (ii) Use the income limit for six (6) persons x thirty percent (30%) divided by twelve (12) = maximum rent.
   4. (4) Income limits sample.

      # Persons		1	2	3	4	5	6
      IncomeLimits	50%	12,150	13,900	15,600	17,350	18,750	20,150
      60%	14,580	16,680	18,720	20,820	22,500	24,180

   5. (5) Maximum rents sample.

      # Bedrooms		0	1	2	3	4
      Income Limits	50%	303	325	390	451	503
      60%	364	390	468	541	604

   6. (6) Note.

      1. (A) For certain projects and depending on the project's rent floor election effective date, rents may be higher than the rent limits derived from the MTSP income limits.

      2. (B) LIHTC project owners can elect to have their rent floor effective on:

         1. (i) The date of their carryover allocation; or
         2. (ii) The date the project is placed in service.
      3. (C) Owners must notify the Arkansas Development Finance Authority if choosing the rent floor election.

Codification Notes: "LIHTC" means low-income housing tax credit.